AES Cor the Corporate Culture

AES Cor

The corporate culture at AES is one of its most important and enduring aspects. Indeed, it is this culture that helped the company move through its restructuring process. Before the restructuring process, the company was headed by a thinly populated headquarters, with a workforce that was used to work independently, and hence could demonstrate little in terms of accountability.

Nevertheless, the corporate culture is seen as extremely important in the company. Corporate culture extends both to customers and employees themselves. One of its core values is "fun." Employees and customers alike are to enjoy the experience of their association with the company. While having fun, the mission of the company is not only to make a profit, but also to improve life for those in poor communities in providing them with safe, clean, and reliable electricity.

Even after the restructuring process, the importance of the organizational culture has not changed, although certain aspects have been addressed in order to improve the value of the company. The main change in this case was a greater sense of discipline and accountability for employees. This however does not include the value of fun from the company. Other values that remain is the core culture of winning, and the drive to succeed by outperforming other companies.

The change towards more discipline and accountability was necessary because of the rapid growth and decentralized structure of the company. The increase of employee numbers from a couple of thousand to hundreds of thousands made it difficult, especially for the small number of head office employees, to effectively manage everybody. The new system is not to detract from the fun, but rather to add to the culture of winning. While restructuring was no "fun," the ultimate effect contributes to a greater sense of responsibility and winning, which does ultimately translate to fun.

2) the organizational structure at AES, before the restructuring process, was based upon a loose, entrepreneurial management style. This structure worked well in concomitance with the company's growth strategy during the 1990s: an aggressive strategy that focused on buying and building as many as possible power plants in South American and Europe. The result was $33 billion in assets, 28 countries, and five continents. The sheer size of the company, along with its rapid growth, created a problem at the core level.

The main problem was that the structure was highly decentralized, and the problem occurred in terms of decision making. Decisions involving billions of dollars were allowed on the ground in a variety of countries, including Argentina, Brazil and England. The decisions related to new projects, and therefore also often involved new employees and young managers. The problem is that the decision makers were often not sufficiently trained or experienced, and did not have the necessary company-wide perspective to qualify for the magnitude of their decisions. Indeed, authority tended to be given to people who did not have the necessary work hours behind them, and this is where the company's lack of centralized management created a problem.

The loose management structure of the company then played a central role in its lack of accountability and sound decision making, and the company lost $3.51 billion, with a record low in stock prices and looming bankruptcy as a reward for this.

Although the initial organizational structure allowed the company's rapid growth, it was therefore time for change, especially in the areas of discipline and accountability, as well as in the management structure. For this reason, a larger number of managers were employed at the upper level of the company, and a sense of responsibility were included with fun as one of the company's core values.

3) the financial situation of AES made it obvious that restructuring was necessary. The loose, decentralized model worked when there were only a couple of thousand employees, and it was easy to track and eliminate mistakes and potentially harmful decisions. The company however outgrew the ability of its few managers to handle the responsibility of so many employees. On a human resource level, the restructuring was therefore necessary in order to regain control of employees who were used to working independently; a paradigm that some were tempted to abuse.